Calculate risk/reward ratios for trades with entry, stop-loss, and target prices, position sizing, and win rate breakeven analysis.
Before placing a trade, you should know what you gain if it works and what you lose if it stops out. This calculator turns entry, stop-loss, and target prices into three numbers: the risk/reward ratio, the position size that risks exactly the dollar amount you choose, and the win rate you would need to break even at that ratio. The thing most traders get wrong is treating a high ratio as proof the trade is good - it only describes the geometry of the payoff. If your actual win rate sits below breakeven, a 3:1 trade still loses money on average.
A concrete input and expected output from the current implementation.
Input
Entry 100.00, stop-loss 95.00, target 110.00, account 10,000, risk 1% of account
Expected output
Risk per share 5.00, reward per share 10.00, ratio 2:1, breakeven win rate 33.3%, position 20 shares (2,000.00, risking 100.00 = 1% of account)
Each share risks 100 - 95 = 5 and can gain 110 - 100 = 10, so the payoff is 10/5 = 2:1. Breaking even at 2:1 needs wins in 1/(1 + 2) = 33.3% of trades, and 1% of 10,000 = 100 divided by 5 per share gives 20 shares, costing 20 x 100 = 2,000.
Risk is the distance from entry to stop-loss; reward is the distance from entry to target. The ratio is reward divided by risk, written like 2:1. It is unitless, so it works at any price level: a 5-point stop on a 100 stock and a 0.05 stop on a 1.00 stock can both show 2:1. The calculator derives the ratio from the prices you enter rather than asking you to type it in.
With reward equal to R times risk, gains equal losses when win rate x R = (1 - win rate), which solves to win rate = 1/(1 + R). At 2:1 that is 33.3%, at 3:1 it is 25%, at 1:1 it is 50%. Position sizing then divides your chosen dollar risk by the per-share risk to return the number of shares whose stop-out costs exactly that amount.
Not by itself. It means the trade wins twice what it risks, but you must still win more than 33% of the time to break even before costs. If your edge on this setup is 25%, the math is negative: 0.25 x 2 - 0.75 x 1 = -0.25R per trade. The ratio is only half the picture; win rate is the other half.
It is the percentage of trades that must win, on average, for gains and losses to cancel out, ignoring costs. At 2:1 the tool returns 33.3%: win one and lose two and you are flat. Below that rate you lose over time; above it you profit. Fees and slippage push the real threshold higher, so aim for a comfortable margin above the number.
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